TY - JOUR AU - Adams, James D AU - Clemmons, J. Roger TI - The Growing Allocative Inefficiency of the U.S. Higher Education Sector JF - National Bureau of Economic Research Working Paper Series VL - No. 12683 PY - 2006 Y2 - November 2006 DO - 10.3386/w12683 UR - http://www.nber.org/papers/w12683 L1 - http://www.nber.org/papers/w12683.pdf N1 - Author contact info: James D. Adams Department of Economics Rensselaer Polytechnic Institute 3406 Russell Sage Laboratory Troy, NY 12180-3590 Tel: 518/396-7163 Fax: 518/276-2235 E-Mail: adamsj14@rpi.edu J. Roger Clemmons Institute for Child Health Policy College of Medicine The University of Florida PO Box 100147 Gainesville, FL 32610-0147 E-Mail: jrc@ichp.ufl.edu M1 - published as James D. Adams, J. Roger Clemmons. "The Growing Allocative Inefficiency of the U.S. Higher Education Sector," in Richard B. Freeman and Daniel Goroff, editors, "Science and Engineering Careers in the United States: An Analysis of Markets and Employment" University of Chicago Press (2009) M3 - presented at "Science and Engineering Workforce Project (SEWP)", October 19-20, 2005 AB - This paper presents new evidence on research and teaching productivity in universities using a panel of 102 top U.S. schools during 1981-1999. Faculty employment grows at 0.6 percent per year, compared with growth of 4.9 percent in industrial researchers. Productivity growth per researcher is 1.4-6.7 percent and is higher in private universities. Productivity growth per teacher is 0.8-1.1 percent and is higher in public universities. Growth in research productivity within universities exceeds overall growth, because the research share grows in universities where productivity growth is less. This finding suggests that allocative efficiency of U.S. higher education declined during the late 20th century. R&D stock, endowment, and post-docs increase research productivity in universities, the effect of nonfederal R&D is less, and the returns to research are diminishing. Since the nonfederal R&D share grows and is higher in public schools, this may explain the rising inefficiency. Decreasing returns in research but not teaching suggest that most differences in university size are due to teaching. ER -